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You can find reports from our Investment and Research team, timely and informative financial planning topics from our Wealth Management team, and deeper dives on various important topics in our white papers from any team member. Read online, share with friends, or download for your convenience.

Chart ISM Services Breakdown

This month’s ISM Services reading came in at a very strong 59.7. Prior to this report, the past few ISM readings had shown some weakness, which was a concerning sign for a domestic economy that is comprised of primarily service-based businesses. More concerning than the down trend in the headline Services PMI number was the sharper decline in some of the segments that roll up into the headline number, such as new orders and backlog. New orders give some insight into the spending businesses are experiencing, while backlog gives us details about how strong a company’s existing pipeline of work is. The fact that almost all of the reported segments rebounded so nicely is encouraging given some of the geopolitical and trade related risks that are looming. Overall, the report showed that the U.S. economy has entered 2019 on solid footing.

Fourth Quarter GDP Report

Gross Domestic Product (GDP) rose by 2.6% in the fourth quarter of 2018, beating expectations of 2.2%. For the year, GDP grew 2.9%, matching 2015 for the strongest annual growth since the Great Recession. The consumer proved very resilient in the fourth quarter, spending 2.8% more despite stock market volatility and a partial government shutdown. Business investment also positively contributed 0.8% to GDP, although recent trends in durable goods orders show that this may be losing momentum. The consumer and business gains were partially offset by several factors. Residential housing-related spending has now contracted in each of the last four quarters. Also, government consumption only contributed 0.1% to GDP compared to 0.4% in Q3. This was largely expected given the partial government shutdown. The GDP report shows that although growth did slow some from earlier in 2018, the U.S. economy ended the year on very solid footing. However, as the effects from last year’s tax cuts begin to fade, we expect growth to moderate in 2019. 

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The transfer of wealth to heirs through your estate plan communicates many things to those we leave behind. It says who is remembered, who is loved, who is important, and who we trust to be in charge. Therefore, dividing assets between your children can be a stressful ordeal. Many parents want to be fair to everyone, interpreted as an even split of all assets. For some families, however, an even split doesn’t make the most sense. How you handle this delicate situation with your own family depends on many personal factors. 

Sometimes being fair doesn’t mean being even when it comes to estate planning, but - in all cases - family meetings can help.

Click here to read more about the Allegiant Private Advisors team’s perspective in a new article on SarasotaMagazine.com.

In the 1975 political thriller film “Three Days of the Condor,” Robert Redford plays a CIA analyst working in a clandestine office where they endlessly read disparate books, newspapers, and magazines from around the world to discern trends, hidden meanings, and other useful information that might be buried in the noise.
 
Allegiant's newest white paper by our Chief Operating Officer and Principal Paul Cantor, CFA, AIF®, CFP®, is similarly an attempt to link a myriad of mega-trends and world events into a tapestry of potential outcomes, and the policies required to get there.

Click here to read The Devolution of Globalization.

With the turn of the calendar, equity markets are off to a roaring start. Troubles from the 4th quarter are a distant memory as U.S. stocks have recovered nearly all their losses. Even more, bonds have staged a nice rally over the last few months, adding incremental return to balanced portfolios. However, even though markets are ignoring the trouble spots, it doesn’t mean they don’t exist. In fact, the U.S. faces a few critical challenges in the coming months. Click here to read more. 

Chart Retail Sales Decline

Coming into early 2019, the economic spotlight was placed on the consumer to see if the 2018 year-end market selling and other soft confidence-related releases would lead to weaker spending. One way to gauge the spending growth of consumers is through the change in retail sales which is displayed by the black line, while the gold line represents the change in retail sales excluding gas stations, building materials, and automobiles. Although it is only one data point, last week’s retail sales decline represents the largest decline since 2009. The decline is concerning given that the data represented December 2018 retail sales, where we would typically expect spending to be strong around the holidays. However, the pessimism that can be extracted from the most recent data point was not supported by numerous other retail spending related gauges around the holiday season or by the current job market and wage growth picture. It will be interesting to see if December’s decline will become a trend or if the data was skewed by one off issues that will be corrected in January.

The Allegiant Private Advisors team is devoted to numerous nonprofit organizations in the community, as a firm and individuals who are passionate about a variety of causes. 

Kristina “KJ” Vorndran, CFP®APA Bio Vorndran, is a member of our Wealth Management team. She recently earned the CERTIFIED FINANCIAL PLANNER™ certification as well as a promotion to paraplanner and is currently pursuing her Master's of Science degree in Personal Financial Planning. In addition to her professional drive, Vorndran has excelled in academic and sporting competitions. She plays the piano, fluently speaks three languages, is a black belt in Shaolin Kempo Karate, graduated summa cum with a 4.0 GPA from the University of South Florida, and holds the title of first - and only - female U.S. Grand National Karting Champion. Now, at the age of 24, KJ has become the youngest President ever elected to the Just for Girls’ Board of Directors. 

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In our community, it seems love is all around throughout the year. If you are considering sharing your success by donating to charities or making gifts to family, we encourage you to read a new article authored by Allegiant Private Advisors team about financially-sound techniques to make the most of your giving.

Click here to learn more and read our complete article on SarasotaMagazine.com, and please contact the Allegiant team if you would like to have a conversation about making the most of your giving. 

Chart Quit Rate and Wage Growth

When looking at the domestic macroeconomic picture, one of the biggest areas of focus is the labor market. This is due to the fact that when jobs are abundant and wages are rising, consumers are more likely to spend and thus stimulate economic activity. While the most popular labor market indicators are the growth in payrolls, wages, and job openings, we also like to pay close attention to the quit rate. The quit rate shows the rate at which workers are voluntarily leaving their jobs. While this may seem like an obscure data point, in actuality it provides tremendous insight. If individuals are voluntarily leaving their jobs, it shows that they have great confidence in the labor market and their prospect for landing a more attractive job. In addition, a rise in the quit rate is also a leading indicator for stronger wage growth.

As you can see in the chart above, the quit rate has moved significantly higher in recent years and is now just below post-recession highs. This has coincided with a sharp increase in wage growth, after years of subpar gains. Along with other key labor metrics, the quit rate is showing that the labor market is still quite strong and labor market participants are increasingly confident. We will continue to monitor the quit rate for signs that confidence in the labor market is shifting.

Chart Consumer Confidence Current vs Expectations

Overall consumer confidence levels are currently near all-time highs, driven by low unemployment and a solid economy. While many people simply look at the headline number and then move on, we always like to break down the data further and examine what is going on beneath the surface. The top panel of the chart above breaks down the overall consumer confidence reading into two data points: the confidence consumers have in their future economic expectations (black line) and the confidence they have in the current economic situation (gold line) with the red shaded bars representing a recession. The bottom panel shows the spread between the current situation and expectations.